Smurfit Kappa's formal return to the stock market yesterday was marked by an 18 cent rise in its share price to €18.93, €2.43 higher than its launch price of €16.50.

With €1.4 billion of the flotation proceeds going to pay down the packaging group's debts, Moody's credit rating agency upgraded its rating on the business to Ba3 from B1.

"The upgrade of all ratings reflects foremost the sizeable debt reduction, but also an ongoing improvement of Smurfit Kappa's operating performance," the agency said. Moody's said the initial public offering enabled the group to lower its debt to €4.4 billion from €5.8 billion and decreased its debts vis-a-vis earnings before interest tax depreciation and amortisation.

"Apart from the sizable reduction of debt, Moody's has noted the improved operating performance on the back of higher prices as a result of increasing industry utilisation rates following capacity closures, as well as realised synergies since the merger in late 2005," it said. "Given the relatively long lead times before new capacity is coming to market, which Moody's believes will not happen in western Europe until 2009, operating utilisation rates should further improve in an environment of continued demand growth."